Effect of Optimal Subsidy Rate and Strategic Behaviour of Supply Chain Members under Competition on Green Product Retailing

This paper investigates the impact of the subsidy and horizontal strategic cooperation on a green supply chain where two competing manufacturers distribute substitutable green products through exclusive retailers. Models are formulated in three-stage game structures in five different scenarios, wher...

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Veröffentlicht in:Mathematical problems in engineering 2021, Vol.2021, p.1-23
Hauptverfasser: Saha, Subrata, Nielsen, Izabela, Sana, Shib Sankar
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Sana, Shib Sankar
description This paper investigates the impact of the subsidy and horizontal strategic cooperation on a green supply chain where two competing manufacturers distribute substitutable green products through exclusive retailers. Models are formulated in three-stage game structures in five different scenarios, where the government organization determines optimal subsidy by pursuing social welfare maximization. Both manufacturers invest in improving green quality levels of products. The study aims to explore the advantage of vertical integration and strategic collusion from the perspective of green supply chain practice in the presence of subsidy. The key contributions from the present study indicate that under competition, members of both supply chains are able to receive higher profits through horizontal collusion, but green quality levels of the product remain suboptimal. If upstream manufacturers cooperate, government subsidy does not necessarily improve product quality level, and the amount of government expenditure increased substantially. By comparing outcomes where members are vertically integrated with scenarios where members make strategic collusion, we found that the former might outperform by later. Cross-price sensitivity appears as a significant parameter affecting supply chain members’ performance and the amount of government expenditure. Cooperation between members at the horizontal level is a more robust strategic measure than vertical integration if consumers are highly price-sensitive.
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source Wiley-Blackwell Open Access Titles; EZB-FREE-00999 freely available EZB journals; Alma/SFX Local Collection
subjects Clean technology
Competition
Consumers
Cooperation
Decision making
Equilibrium
Expenditures
Government spending
Manufacturers
Optimization
Parameter sensitivity
Profits
Retail stores
Retailing
Social exclusion
Supply chains
Vertical integration
title Effect of Optimal Subsidy Rate and Strategic Behaviour of Supply Chain Members under Competition on Green Product Retailing
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